Capital Thinking Update - October 17, 2011

    View Authors 17 October 2011

    General Legislative

    • On Monday, October 17, the House will observe a District Work Period and will be out of session. The Senate will convene at 2:00 p.m. for a period of morning business. Thereafter, the Senate will begin consideration of H.R. 2112, the legislative vehicle for the (1) Agriculture, (2) Commerce, Justice, and Science, and (3) Transportation/HUD appropriations bills. This “min-ibus” appropriations bill is expected to consume the Senate’s time for the balance of the week.

    Budget, Appropriations

    LEGISLATIVE ACTIVITY

    • FY2012 Appropriations “Minibus” Strategy Underway. The Senate intends to pass its first FY2012 Appropriations Minibus this week. The Agriculture spending bill (H.R. 2112) will serve as the legislative vehicle and will incorporate the Commerce-Justice-Science (S. 1572) and Transportation-Housing and Urban Development (S. 1596) bills. A number of amendments are expected to be offered to alter proposed spending levels for NASA, law enforcement, community development and housing programs, among others.
      Leaders in both chambers prefer smaller spending packages in lieu of one large omnibus measure and are currently negotiating an agreement on spending caps (302(b) allocations) for each bill. The current FY2012 Continuing Resolution (P.L. 112-36) expires on November 18.
    • Senate Defeat Democratic Jobs Bill. On October 11, the Senate voted 51-48 for cloture on the Motion to Proceed to debate on the American Jobs Act (S. 1660), failing, as expected, to reach the required 60-vote threshold to proceed with the bill and essentially defeating the Democratic proposal. The entire 46-member Republican Senate caucus voted against the motion. They were joined by two Democrats: Senators John Tester (D-MT) and Ben Nelson (D-NE). Three Democratic Senators who voted in favor of the procedural motion – Jim Webb (D-VA), Joe Manchin (D-WVA) and Joe Lieberman (I-VT) – said they would, without significant changes, vote against the bill itself on its merits. The bill mirrored President Obama’s proposal; however, Senate Democrats altered the offset provisions in the bill - including a surtax on millionaires by raising the top tax rate for gross income over $1 million (beginning in 2013) by 5.6 percent - to replace other tax provisions proposed by the President, including oil and gas industry tax increases and an increase in taxes for individual income over $200,000, and household income over $250,000. Senate Majority Leader Harry Reid (D-NV) intends to bring up individual components of the proposal in the coming weeks.
    • Senate Republicans Release Alternative Jobs Proposal. On October 13, Republican Senators John McCain (R-AZ), Rob Portman (R-OH), and Rand Paul (R-KY) released an outline of their Jobs Through Growth Act. The proposal includes a number of initiatives seen in prior iterations of Republican jobs-related agendas: a constitutional amendment mandating a balanced federal budget; presidential line-item veto power; repeal of the 3 percent IRS withholding from payments to government contractors; repeal of health care reform; regulatory overhaul; expansion of offshore energy production; and some corporate/small business tax reform. With little overlap to the Democratic proposal, it is unlikely this will serve as more than political positioning on jobs-related items going forward.

    OTHER BUDGET, APPROPRIATIONS NEWS

    • Committees Submit Recommendations to Super Committee. A number of Congressional and Committee leaders, primarily Democrats, submitted recommendations to the Joint Select Committee on Deficit Reduction (Super Committee). Generally, Democrats urged the Super Committee to focus on spending cuts, new revenue, job creation and long-term economic growth. House Republicans intend to informally submit their recommendations to the Super Committee.
      On October 11, Senate Budget Committee Chairman Kent Conrad (D-ND) joined Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations Chairman Carl Levin (D-MI) in sending a letter to the Super Committee opposing another repatriation corporate tax break as was created in 2004. Additional formal recommendations from the Senate Budget Committee, as highlighted in our last report, may be forthcoming.

      In his October 13 letter to the Super Committee, House Appropriations Committee Ranking Member Norm Dicks (D-WA) reiterated the message Federal Reserve Chairman Ben Bernanke delivered in his October 4 testimony to Congress in which he stressed that long-term budget reductions are required to an even greater extent than mandated in the Budget Control Act (P.L. 112-25), but that caution should be taken so that near-term actions do not impede economic growth.

      Ranking Member Dicks focused on the consequences of sequestration, the process that would occur in the event the Super Committee does not produce a deficit reduction plan or if Congress cannot pass whatever plan the Super Committee puts forth. Citing a Congressional Budget Office estimate, Ranking Member Dicks notes that the results of sequestration in 2013 alone would include:
      • A reduction of 10 percent on discretionary appropriations for Defense (Function 050 programs), a $55 billion cut in FY2013 defense appropriations to take effect in January 2013, over the last three-fourths of the fiscal year.
      • A reduction of 7.8 percent on discretionary appropriations for nondefense programs, resulting in a $39 billion cut in FY2013 nondefense appropriations to take effect in January of 2013.

     

    Education

    LEGISLATIVE ACTIVITY

    • Senate Draft Bill of the Elementary and Secondary Education Act. On Tuesday, October 10, Senator Tom Harkin (D-IA) introduced the Senate’s draft bill to rewrite No Child Left Behind. The bill requires states to adopt academic standards aligned with college- and career-readiness standards and design new assessments that measure critical thinking skills in reading, math, and science. The bill also seeks to replace federal accountability measures with state-designed systems. Other provisions of the bill include codifying the Obama Administration’s signature Race to the Top competitive grant program, as well as expanding the charter school grant program. States are also given 100 percent flexibility in using federal funds once they do not redirect such funds out of programs for disadvantaged students.

      On October 18, the Senate Health, Education, Labor, and Pensions (HELP) Committee will begin a four-day markup of the bill. Senator Harkin expects the draft bill to change prior to the markup because of on-going differences between Democrats and Republicans about incorporating accountability measures into the bill versus providing states a sufficient amount of flexibility. Senator Harkin hopes the bill will be on the Senate floor before Thanksgiving break.

    REGULATORY ACTIVITY

    • State Waivers. More than 50 percent of states have expressed their intent to request relief from key provisions of the No Child Left Behind Act. As of October 12, 17 states (Colorado, Florida, Georgia, Indiana, Kentucky, Massachusetts, Michigan, Minnesota, Mississippi, New Jersey, New Mexico, North Carolina, North Dakota, Oklahoma, Tennessee, Vermont and Wisconsin) had indicated an intent to request Elementary and Secondary Education Act (ESEA) flexibility by November 14, 2011, for a December peer review, and 18 states (Arkansas, Delaware, Hawaii, Idaho, Illinois, Iowa, Kansas, Maine, Maryland, Missouri, Nevada, New Hampshire, Ohio, Rhode Island, South Carolina, South Dakota, Virginia and Washington), the District of Columbia, and Puerto Rico had indicated an intent to request flexibility by mid-February 2012, for a spring 2012 peer review. Two more states (Connecticut and Oregon) have also indicated intent without a specific timeline.

     

    Environment

    LEGISLATIVE ACTIVITY

    • Oil Spill Hearing. On Tuesday, October 18, the Senate Committee on Energy and Natural Resources will hold a full Committee hearing to examine the status of response capability and readiness for oil spills in foreign Outer Continental Shelf waters adjacent to U.S. waters.
    • Shale Gas Oversight. On Thursday, October 20, the Senate Committee on Energy and Natural Resources, Subcommittee on Water and Power will hold an oversight hearing to examine shale gas production and water resources in the Eastern U.S.
    • Brownfields. On Wednesday, October 19, the Senate Committee on Environment and Public Works, Subcommittee on Superfund, Toxics and Environmental Health will hold a joint oversight hearing to examine the Brownfields Program focusing on cleaning up and rebuilding communities.
    • Flood Control. On Tuesday, October 18, the Senate Committee on Environment and Public Works will hold a full Committee hearing to review the 2011 floods and the condition of the nation’s flood control systems.
    • National Parks and Trails. On Wednesday, October 19, the Senate Committee on Energy and Natural Resources, Subcommittee on National Parks will hold a hearing to receive testimony on bills addressing national parks and trail systems.

    REGULATORY ACTIVITY

    • America’s Great Outdoors Economic Impact Report. The Obama Administration is releasing the America’s Great Outdoors 2011 Progress Report, in which 15 federal agencies have outlined their combined conservation and recreation successes, including gains in youth employment, new trail designations, the creation of urban campgrounds and historic investments in large landscapes such as the Everglades. National Parks see more than 280 million visitors a year, generating $12 billion in visitor spending and supporting nearly 250,000 jobs. Estimated recreation activities including hiking, camping and fishing contribute $730 billion to the U.S. economy, support more than 6 million jobs, and generate $289 billion annually in retail sales and services. The report can be obtained online here.

      Additionally, the Department of the Interior will soon release a 50-state report outlining 100 locally-supported outdoor initiatives. The 50-state report is a result of 50 meetings with Governors and stakeholders held by Secretary Salazar and other senior Interior officials to solicit ideas on how to best implement America’s Great Outdoors (AGO) in their states.
    • US-Mexico Border 2020 Program Draft Framework. The EPA is requesting comments on the draft “Border 2020: U.S.-Mexico Environmental Program” framework. The U.S.-Mexico Environmental Program (Border 2012) is a collaboration between the U.S. and Mexico to improve the environment and protect the health of the 12 million people living along the border. The bi-national program focuses on cleaning the air, providing safe drinking water, reducing the risk of exposure to hazardous waste, and ensuring emergency preparedness along the U.S.-Mexico border. The goals for the year 2020 include: 
      • Goal #1: Reduce Conventional Air Pollutant and Greenhouse Gas Emissions
      • Goal #2: Improve Access to Clean and Safe Water
      • Goal #3: Materials Management and Clean Sites
      • Goal #4: Improve Environmental and Public Health through Chemical Safety
      • Goal #5: Enhance Joint Preparedness for Environmental Response
      • Goal #6: Compliance Assurance and Environmental Stewardship

    The draft can be obtained online here. The comment period closes on November 30, 2011.


    Financial Services

    LEGISLATIVE ACTIVITY

    • Senate Banking Subcommittee to Examine Exchange-Traded Funds. On Wednesday, October 19, the Senate Banking Subcommittee on Securities, Insurance, and Investment will hold a hearing on “Market Microstructure: Examination of Exchange-Traded Funds.” Witnesses will include: Ms. Eileen Rominger, Director of the Division of Investment Management at the SEC; Mr. Eric Noll, Executive Vice President of Transaction Services at NASDAQ OMX; Mr. Noel Archard, Managing Director at BlackRock I-Shares; and Mr. Harold Bradley, Chief Investment Officer at Ewing Marion Kauffman Foundation.
    • Senate Banking Subcommittee to Discuss Global Economic and Financial Risks. On Thursday, October 20, the Senate Banking Subcommittee on Security and International Trade and Finance will hold a hearing titled, “The G20 and Global Economic and Financial Risks.” Witnesses for the hearing include the Department of Treasury’s Under Secretary for International Affairs, The Honorobale Lael Brainard and the Carnegie Endowment for International Peace’s Director of the International Economics Program and Senior Associate, Mr. Uri Dadush.

    REGULATORY ACTIVITY

    • SEC to Hold Roundtable on Anti-Money Laundering. On Monday, October 17, the SEC will hold a public roundtable to discuss the unique regulatory issues surrounding the execution, clearance and settlement of microcap securities. The roundtable will feature in-depth discussions of key regulatory issues, including anti-money laundering monitoring, compliance challenges, and potential changes to the regulatory framework. Panelists will include representatives from The Deposit Trust Company, broker-dealers, and the Financial Industry Regulatory Authority.
    • CFTC to Address Rules on Derivatives Clearing Organization and Swap Regulation. On Tuesday, October 18, the CFTC will hold an open meeting to take up the final rule on derivatives clearing organization general provisions and core principles and the final rule on position limits for futures and swaps. The CFTC will also consider a notice of proposed amendment to the effective date for swap regulation.
    • SEC to Discuss Rulemaking on Conflict Minerals. On Tuesday, October 18, the SEC will hold a public roundtable to discuss the agency’s required rulemaking under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which relates to reporting requirements regarding conflict minerals originating in the Democratic Republic of the Congo and adjoining countries.

    OTHER FINANCIAL SERVICES NEWS

    • Agencies Release Guidance Regarding Flood Insurance. On Friday, October 14, the FDIC, Federal Reserve, OCC, the National Credit Union Administration and the Farm Credit Administration published guidance finalizing two questions and answers proposed in 2009 regarding flood insurance. The first question relates to insurable value, while the second relates to force placement of flood insurance. Additionally, the agencies requested comments on questions and answers regarding force placement of flood insurance.

     

    Health Care

    LEGISLATIVE ACTIVITY

    • Democratic Ranking Members Release Recommendations to the Super Committee. Meeting the deadline set in the Budget Control Act directing Committees of jurisdiction to transmit recommendation for changes in law to reduce the deficit, Minority Leader Nancy Pelosi (D-CA) sent a letter to the Joint Commission on Deficit Reduction outlining the recommendations of 16 Democratic Ranking Members of House Committees to the JSC that represent options for job creation, revenue, and savings within the jurisdiction of each Committee. In addition to tax reform, changes to spectrum policy and clean energy policy and environmental initiatives, Ranking Member health recommendations include protecting health coverage, avoiding health care cost shifting, rooting out inefficiencies and overpayments, fixing the sustainable growth rate (SGR) and addressing other extenders, promoting prevention, lowering generic drug costs, and medical liability reform.
    • Senate HELP Hearing. The Senate Committee on Health, Education, Labor and Pensions will hold a hearing on Tuesday, October 18 at 10:00 a.m., titled, “The Recession and Older Americans: Where Do We Go from Here.” The Committee will hear from witnesses, including Barbara Bovbjerg with the Government Accountability Office, Gail Ruggles from Lyndonville, VT, Sandra Nathan with the National Council on Aging, and Heidi Hartmann with the Institute for Women’s Policy Research.

    OTHER HEALTH NEWS

    • MedPAC SGR Recommendations. Following the October 6 vote and approval of the Medicare Payment Advisory Commission of recommendations for reforming the sustainable growth rate system, the Commission sent a letter to the Committees of jurisdiction in the House and Senate detailing those four recommendations including an updated list of offset options. The recommendations include that: (1) Congress should repeal the SGR system and replace it with a 10-year path of statutory fee schedule updates; (2) Congress should direct the Secretary to regularly collect data (including service volume and work time) to establish more accurate work and practice expense values; (3) Congress should direct the Secretary to identify overpriced fee schedule services and reduce their relative value units (RVUs) accordingly; and (4) Congress should direct the Secretary to increase the shared savings opportunity for physicians and health professionals who join or lead two-sided risk accountable care organizations (ACOs). The list of offset options does not contain any new proposals to the list released in September; however, it does modify a few of the proposals and revises some of the savings estimates. In particular, the revised offset list proposes to apply the competitive bidding offset in 2013 rather than 2012, targets a three percent reduction in hospice care provided in nursing homes, rather than the six percent in the draft list, and estimates a 10 percent reduction in clinical lab services to save $10 billion over 10 years (rather than $21 billion). The revised savings total is $50 billion over 10 years for tier I and $168 billion over 10 years for tier II, for a total of $219 billion over 10 years.
    • IOM Meetings. The IOM will hold a public workshop on Thursday, October 20, titled, “Alliances for Obesity Prevention: Finding Common Ground.” The workshop will be hosted by the IOM Standing Committee on Childhood Obesity Prevention. The purposes of the workshop include: (1) hearing from organizations and/or movements that may be allies for obesity prevention, and engendering dialogue with those organizations to identify common ground; (2) discussing how to develop innovative alliances that will maximize resources, accelerate progress, and sustain efforts toward obesity prevention; and (3) learning from other public health initiatives that have benefitted from forming such alliances in order to maximize resources and accelerate progress.

      The IOM will also hold a briefing report on October 20 on front of package nutrition rating systems and symbols. As a first step toward clearing up consumer confusion about food labeling and in response to a Congressional directive, the Centers for Disease Control and Prevention, and the Food and Drug Administration have asked the IOM to undertake a review of “front-of-package” nutrition rating systems and symbols. An IOM committee will begin by focusing on the nutrition criteria underlying the rating systems and considering the purpose and overall merits of these types of programs.

     

    International, Defense, Homeland Security

    Trade Developments. On Wednesday, October 12, the Senate and House passed the implementing legislation for the three pending U.S. Free Trade Agreements (FTAs) with Colombia, Panama and South Korea, providing a win for the White House, the Republican Congressional Leadership and select pro-trade Senate and House Democrats. President Obama will sign the bills into law this coming week, and the Korean National Assembly is expected to pass the U.S.-Korea agreement (KORUS) in the near term. After that, the Office of the U.S. Trade Representative (USTR) will conduct implementation discussions with the Colombian, Panamanian, and Korean Governments to enable the FTAs to enter into force as quickly as possible, but no sooner than January 1, 2012. The Korea agreement passed by a margin of 278-151 in the House and 83-15 in the Senate, compared to 300-129 in the House and 77-22 in the Senate for the Panama FTA, and 262-167 and 66-33 for Colombia. Some Democratic Hispanic Caucus Members and Republican Textile Caucus Members voted for the Panama FTA but not KORUS in the House, whereas some Senate and House Democrats voted only for KORUS, citing foreign policy reasons. Meanwhile, the parallel legislation to renew Trade Adjustment Assistance (TAA) and the Generalized System of Preferences (GSP) passed 307-122 in the House, with the GOP Caucus almost evenly divided and the Democratic Caucus unanimously in support. 


    Super Committee

    The Super Committee has not held a public hearing since September 13, though closed-door meetings continue on an almost-daily basis. No public hearings have been announced for the upcoming week.   

    While the Committee used most of the last month to inventory deficit reduction options available to them, it must now begin to make real decisions.  By most accounts, progress towards bipartisan deficit reduction legislation remains very slow, in large part due to disagreements over whether to include tax increases as part of the legislation, and whether and how significant any cuts to entitlement programs (Medicare, Medicaid and Social Security) should be.  It is likely that the Committee will first focus on non-health mandatory spending items that were discussed last spring by the Biden Group (such as agriculture subsidies and federal retirement benefits), while discussions continue on taxes and entitlements.

    The Super Committee is under pressure to have some measure of agreement by around November 1 to give the Congressional Budget Office time to score their proposal, which the Super Committee itself must vote on by November 23 in order to maintain “fast track” procedures of any legislation they report. The Super Committee is expected to meet in closed sessions throughout the next two weeks.

    The Super Committee may also consider recommendations of the standing Committees of the House and Senate. October 14 is the date by which Congressional Committees were asked to submit proposals to the Super Committee for consideration. On October 13, House Democrats submitted a litany of proposals to the Super Committee. Further, notably, on October 14, Senator Orrin Hatch (R-UT), on behalf of Senate Finance Committee Republicans, sent recommendations to the committee. While the Super Committee will no doubt give due consideration to these recommendations, nothing compels the Super Committee to include any of these proposals.


    Tax

    LEGISLATIVE ACTIVITY

    • Tax Reform in Super Committee Deliberations. While the Super Committee met several time this week in extended closed-door sessions, no details have emerged on any progress toward an agreement. Whether, and to what degree, tax provisions will be included in any final agreement remains an important and open question. Although the Super Committee has been well briefed on tax reform options and discussion continues among various Super Committee Members regarding the possibility of incorporating business entity tax reform as part of any forthcoming Super Committee proposal, it still remains unlikely that the Super Committee will be able to include fundamental reform given the truncated timeframe of its proceedings. Short of this, other possible options include setting up a process whereby fundamental reform could be compelled next year, or including various piecemeal tax provisions in a final product and leaving reform to be dealt with at a later point in time. However, significant disagreements over policy outcomes and revenue targets continue to persist, as evidenced by the differing proposal submitted to the Super Committee by House Ways & Means Committee Democrats and Senate Finance Committee Republicans.
    • Senate Rejects Obama Jobs Proposal as Modified with a “Millionaires Surtax.” On October 11, the Senate failed to cut off debate on the motion to proceed to the President’s jobs bill proposal, as modified by Senate Majority Leader Harry Reid. The vote was largely along party lines, with all but two Senate Democrats voting for cloture, and all Republicans voting against cloture. The proposal includes payroll tax cuts for employers and employees, along with additional spending measures intended to boost economic growth. The proposal is fully offset by a 5.6 percent surtax on modified adjusted gross income exceeding $1 million ($500,000 in the case of single filers) beginning in 2013.  This offset, which is scored by the Joint Committee on Taxation as raising $450 billion over 10 years, replaced the panoply of revenue raisers originally included in the Obama jobs proposal.  The revenue provisions the surtax replaces include a reduction in itemized deductions and exclusions for taxpayers with income above $250,000, as well as various corporate tax increases, such as repeal of various on oil and gas incentives, reclassification of the tax treatment of carried interest, and a phase-out of LIFO accounting.

      While a number of Senators have indicated they expect pieces of the Obama jobs proposal to be brought to the floor for votes, it remains unclear when the Senate will resume consideration of such proposals and what types of proposals will be voted on at that time.
    • Senate Republican Alternative to Jobs Bill Includes Fundamental Tax Reform. On October 13, Senate Republicans released an alternative to the Democrat’s jobs bill that would provide for a comprehensive overhaul the tax system and institute top individual and corporate income tax rates of 25 percent. The Republican plan would reduce individual income tax rates to a maximum of 25 percent with no more than three marginal rates and reduce the top corporate rate to 25 percent. The legislation would also establish a territorial tax system, and eliminate the 3 percent withholding tax law requiring governments at all levels to withhold portions of payments due private vendors.
    • Levin Report on 2004 Repatriation Law. On October 10, Senator Carl Levin (D-MI), Chairman of the Senate Homeland Security and Governmental Affairs Permanent Subcommittee on Investigations, released a report analyzing a repatriation measure in the 2004 American Jobs Creation Act that allowed U.S.-based companies to repatriate foreign earnings accumulated and held overseas during 2005 at a 5.25 percent rate. The report titled, “Repatriating Offshore Funds: 2004 Tax Windfall for Select Multinationals,” criticizes the 2004 tax holiday as failing to stimulate job creation and resulting in U.S. multinational corporations moving jobs and investment offshore.

      The report was released on the heels of a recent a repatriation measure proposed by Senators Kay Hagan (D-NC) and John McCain (R-AZ). The Foreign Earnings Reinvestment Act would temporarily tax repatriated dollars at 8.75 percent, or as low as 5.25 percent for any company that increases its qualified domestic payroll by 10 percent in 2012. The legislation also includes a penalty for any company that reduces payroll employment over the next two years. The Hagan/McCain bill provides a similar, but not identical, repatriation framework to legislation introduced in the House earlier this year by Representatives Kevin Brady (R-TX) and Jim Matheson (D-UT). In an October 12 letter, Blue Dog Democrats endorsed the Brady/Matheson repatriation bill and urged the Super Committee to consider repatriation as part of its deficit reduction proposal. The Brady/Matheson bill has been referred to the Ways & Means Committee but has not yet been marked up.

      Some Congressional Democrats, including Senator Chuck Schumer (D-NY), have indicated that a repatriation holiday would have a stronger chance of passing if tied to an “infrastructure bank” proposal that would finance infrastructure projects.
    • Ways & Means Committee Approves Appeal of Withholding Law. On October 13, the House Ways & Means Committee voted out legislation to repeal a law that requires federal, state and local governments to withhold 3 percent from payments for goods and services beginning in 2013. The voice vote on the repeal bill (H.R. 674) was followed by a 23-12 party-line vote on a secondary bill (H.R. 2756) that would modify the definition of income for determining eligibility for exchange subsidies, Medicaid, and the Children's Health Insurance Program. House floor action is expected the week of October 24.
    • Tax Reform Hearings. Hearings on fundamental tax reform continue on both the House Ways & Means and Senate Finance Committees.

      The Senate Finance Committee postponed a hearing on “Tax Reform Options: Capital Investment and Manufacturing,” originally scheduled for Wednesday, October 12 on Tax Reform Options: Capital Investment and Manufacturing. It is likely that hearing will be rescheduled for sometime in November. The previously announced witnesses for that hearing were: Dr. Jane Gravelle, Senior Specialist in Economic Policy, Congressional Research Service, Library of Congress; Douglas Holtz-Eakin, Ph.D., President, American Action Forum; Dr. Robert D. Atkinson, President, Information Technology and Innovation Foundation; Dr. J.D. Foster, Norman B. Ture Senior Fellow, Economics of Fiscal Policy, The Heritage Foundation; Dr. Michelle Hanlon, Associate Professor of Accounting, Massachusetts Institute of Technology, Sloan School of Management.

      The following hearing is scheduled this week:

      October 18: Senate Finance Committee hearing on Tax Reform Options: Incentives for Charitable Giving. The following witnesses are scheduled to appear: Mr. Frank Sammartino, Assistant Director For Tax Analysis, Congressional Budget Office; Elder Dallin H. Oaks, The Quorum of the Twelve Apostles, The Church of Jesus Christ of Latter-day Saints; Dr. Eugene Steuerle, Richard B. Fisher Chair and Institute Fellow, The Urban Institute; Mr. Brian A. Gallagher, President and CEO, United Way Worldwide; Mr. Roger Colinvaux, Associate Professor, The Catholic University of America, Columbus School of Law.

    TechComm

    LEGISLATIVE ACTIVITY

    • Market Equity Act Introduction. On October 12, Representatives Jackie Speier (D-CA) and Steve Womack (R-AK) introduced the Marketplace Equity Act. At its heart, the bill gives states the authority to compel online retailers to collect sales taxes. The bill differs from Senator Dick Durbin’s (D-IL) efforts to allow the collection of taxes for online transaction in that Representative Speier’s bill gives states flexibility in crafting their tax policies to conform to the law. Senator Durbin’s bill allows states to adopt a national streamlined sales-tax agreement to require out-of-state retailers to collect sales taxes for online purchases.
    • Cybersecurity. On October 5, the House Republican Cybersecurity Taskforce released its recommendations to point the way for cybersecurity legislation for the remainder of the 112th Congress. Led by Taskforce Chairman Mac Thornberry (R-TX), the Taskforce made recommendations in four key areas: authorities, information sharing and public-private partnerships, critical infrastructure, and domestic legal frameworks. On October 11, Chairman Thornberry told an audience at the Center for Strategic and International Studies that it is the Taskforce’s intention to draft separate pieces of legislation to address the specific recommendations laid out on October 5, and that those bills would be introduced in the near future. While Chairman Thornberry expressed confidence that the soon-coming bills would pass the House – before releasing the report, the Taskforce had already secured the support of the nine committees with jurisdiction over cybersecurity issues – the proposals may find a tougher road in the Senate, as Senate Majority Leader Harry Reid (D-NV) has long supported enacting comprehensive legislation rather than moving in a piecemeal fashion.
      The full Taskforce report is available on Representative Thornberry’s website.
    • Privacy. On October 13, the House Energy and Commerce Committee, Subcommittee on Commerce, Manufacturing, and Trade, held a hearing examining consumer attitudes toward Internet privacy. Witnesses included representatives of Intuit, Evidon, Microsoft, the Digital Advertising Alliance, Carnegie Mellon University, and the World Privacy Foundation. While Subcommittee Chair Mary Bono Mack (R-CA) noted that her priority is still “safe data,” she did not back away from earlier statements that privacy legislation is “just not ready for prime time.” Representative Henry Waxman (D-CA), however, voiced frustration saying, “I hope we’re nearing the end of this latest cycle of privacy hearings and can finally see some movement on this issue.” That being said, indications are that another hearing may be scheduled in November.

    REGULATORY ACTIVITY

    • FCC Open Meeting. On October 27, the FCC will hold its monthly open meeting. At the meeting, the Commission will: (1) consider a Notice of Proposed Rulemaking (NPRM) to reform the Universal Service Fund to support Broadband services; (2) consider an NPRM to replace television broadcast stations' public files with online public files to be hosted by the Commission; and (3) receive a status report by the Public Safety and Homeland Security Bureau on preparations for the national test of the Emergency Alert System to be held on November 9, 2011.
    • Broadband Adoption Expansion. At a speech at the Pew Charitable Trust on October 12, FCC Chairman Julius Genachowski announced plans to create a “Digital Literacy Corps” whose goal will be to help close the broadband adoption gap. The proposal will expand digital literacy training to the FCC’s “School Spots” program, which allows schools to keep their computer labs open after hours for students and their families. By extending open hours, the proposal will allow more libraries to host in-person, basic digital literacy training programs. To compliment this effort, private companies and nonprofits have joined to form “Connect to Compete,” a nonprofit initiative to execute the offerings made on “expanding digital literacy and helping close the jobs skill gap.” Companies and nonprofits that have already signed on to the project include, but are not limited to, the likes of Best Buy, Microsoft, Sesame Workshop, and the Boys and Girls Clubs of America. Additional information is available online.

      Next Generation 911. On September 22, 2011, the Federal Communications Commission adopted a Notice of Proposed Rulemaking (NPRM) in the Next Generation 911 (NG911) proceeding. The NG911 NPRM seeks comment on a number of issues related to accelerating the development and deployment of NG911 technology that will enable the public to send emergency communications to 911 Public Safety Answering Points (PSAPs) via text, photos, videos and data, and enhance the information available to PSAPs and first responders for assessing and responding to emergencies. On October 12, 2011, the Federal Register published a summary of the NG911 NPRM. Comments must be filed on or before December 12, 2011, and reply comments must be filed on or before January 10, 2012.

     

    Transportation

    LEGISLATIVE ACTIVITY

    • National Infrastructure Bank (NIB). On Wednesday, October 12, 2011, the House Transportation and Infrastructure (T&I) Subcommittee on Highways and Transit held a hearing titled, “National Infrastructure Bank: More Bureaucracy & More Red Tape.” Led by Full Committee Chairman John Mica (R-FL) and subcommittee chair John Duncan (R-TN), Republican Members were overwhelmingly opposed to the Administration’s NIB proposal while Democratic Members expressed greater support or willingness to consider a NIB as a financing tool for transportation and infrastructure projects. Republican Members instead called for expanding and reforming existing innovative financing programs like TIFIA, RRIF and Private Activity Bonds (PABs), among others.
    • SAFETEA-LU Reauthorization. Senate Environment and Public Works Chairman Barbara Boxer (D-CA) has continued to affirm her intention to mark up the highway title of the reauthorization in the coming weeks. Boxer has apparently won the support – or at least the consent – of Republicans leaders on the transportation authorizing committees to move forward with a mark-up of a two-year bill at current levels before the Senate Finance Committee is able to secure the additional revenue needed for the bill. Meanwhile, on the House side, Republican leaders continue to explore options for moving a six-year transportation bill as a centerpiece of their jobs agenda – with the additional revenue tied to an increase in domestic energy exploration, also a core part of the Republican jobs and energy security agenda. The revenue raised from the sale of new oil and gas lease rights on federal lands, plus a possible new tax negotiated with the oil and gas industry for new leasing rights, would be used to support a six-year bill at approximately current funding levels.
    • Transportation Appropriations. The Senate is expected to move three appropriations bills to the floor – the Transportation-HUD, Agriculture and Commerce-Justice-Science bills – in the coming legislative days. Earlier in the week, Majority Leader Harry Reid (D-NV) announced his intention to bring the three appropriations measures to the floor Thursday as a single legislative vehicle. Both the House and Senate appropriators have confirmed an intention to move forward with multiple batches of smaller “mini-bus” bills to avoid having a massive, trillion-dollar plus omnibus measure. The Senate is positioning the Transportation-HUD bill as the first mini-bus. Among major differences between the House and Senate versions of the transportation appropriations bill that will have to be reconciled are: the obligation limitation for Highway Trust Fund programs, funding for the TIGER program, the New Starts funding level, Amtrak spending, and the spending levels for a number of HUD programs. Earlier this week, Senator Mark Udall (D-CO) joined with EPW Ranking Member James Inhofe (R-OK) in writing to the Senate Appropriations Committee, urging them to set the obligation limitation for trust fund programs consistent with the six-month extension of SAFETEA-LU which extended current funding levels.
    • Continued Focus on Infrastructure. With the American Jobs Act unable to secure enough votes to move forward in the Senate, attention has turned to the potential for moving specific elements of the package. Whether or not there will be any effort to move the transportation infrastructure piece independently remains to be seen, but it is very unlikely that there will be a direct transportation spending measure independent of SAFETEA-LU reauthorization. However, as part of the Administration’s continued focus on infrastructure, the President's Jobs Council released its initial report on Tuesday – with its top recommendations being to invest aggressively and efficiently in infrastructure, and to do so through expanded public private partnerships. The Jobs Council's specific infrastructure recommendations included: (1) reauthorizing the main surface transportation programs, with a focus on performance and accountability; (2) increasing leveraging and expanding existing PPP mechanisms; (3) creating a National Infrastructure Financing Organization; (4) increasing flexibility for tolling and pricing to maintain the user-fee nature of infrastructure financing; and (5) streamlining permitting and approvals. In conjunction with the Jobs Council's report, the President also announced that 14 large infrastructure projects were being expedited through the environmental review and other permitting processes. In a Presidential Memorandum issued in August, the President had directed DOT and other agencies to identify high-priority infrastructure projects that could be expedited. In this week's announcement, the President said that information gathered while expediting these projects will be used to further streamline the review and permitting process.